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  • GDP, US$bn: 5.0
  • GDP per capita, US$: 999.8
  • Population, mn: 5.2
  • Inflation, CPI ave: 13.0
  • FX, LCY/US$: 16.1
Regulatory Risk Rating
42
0
100
Score: 42
Severe Risk
Neither triumph nor disaster, Eritrea’s Mining Proclamation casts the Ministry of Mines and Energy in the role of an overbearing parent who recognises the need to relinquish control but can’t quite do so. The miner (the child in this scenario) is granted certain rights and freedoms that give the impression of compromise, a loosening of the reins if you will; but don’t be fooled – it remains the prerogative of the Ministry – as head of this household – to take decisions on the issues that really matter!

Corruption Potential Index

Score: 50
Moderate Corruption Potential

Corruption Risk Index

Score: 43
Moderate Corruption Risk

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Mining Overview Commentary plus sign

ERITREA - MINING REGULATIONS

GENERAL

Eritrea, officially the State of Eritrea, is located on the Horn of Africa in the east of the continent, bordering Sudan to the north and west, Ethiopia to the south, Djibouti to the southeast and the Red Sea to the east and northeast. Formerly a part of Ethiopia, Eritrea officially gained independence in 1993 following a referendum in which over 99% of voters (with a turnout of over 98%) voted for independence. Though the referendum was held in 1993, many Eritreans mark 24th May 1991 as the country’s independence day, as this date marks the end of the country’s 30-year war with Ethiopia. The war was led by the Eritrean People’s Liberation Front – a separatist group which fought against the Soviet-backed, Ethiopian army. The group later became the People’s Front for Democracy and Justice, which is currently the governing and only political party in the country. To this date, elections, promised in 1997, have never been held.

Today, Eritrea is recognised as many things – few of which are positive. Conflict has continued in the country since the end of the war as a result of border disputes with Ethiopia. Between 1998-2000 more than 80,000 people were killed as a result of further fighting between the two countries and, though a peace deal was reached in 2000, clashes continue to break out on the Eritrean-Ethiopian border. With a GDP per capita (PPP) of just over $1,300 (USD), Eritrea is one of the world’s poorest countries; in 2015 it was rated 179th out of the 188 countries covered in the UN’s Human Development Index. In addition, Eritrea has a reputation as an incredibly secretive and repressive country - in 2017, it was rated 179th out of 180 countries reviewed in the World Press Freedom Index – with only North Korea receiving a worse rating.

Reliable statistics about the impact of mining on Eritrea’s GDP are not widely available, though USGS reports that the sector contributed around 1.7% of GDP in 2012. According to the same source, Eritrea is a known producer of copper, gold and silver, as well as cement, coral, granite, gravel, limestone, marble, quartz and salt (amongst others). Mining in the country is a controversial issue. In 2014, three Eritrean citizens filed a claim against Canadian mining company Nevsun Resources, alleging that human rights abuses had been committed at the Bisha mine – a project 60% owned by Canada’s Nevsun and 40% by the Eritrean government. The case concerns the issue of conscription – with plaintiffs claiming they were the victims of forced labour and inhuman treatment. Though Nevsun appealed the case on the basis that it should be heard in an Eritrean court, the motion was rejected by the British Columbia Court of Appeal, paving the way for the case to be heard in Canada.

PRINCIPAL LEGISLATION AND REGULATOR

The Mining Proclamation No. 68/1995 (MP) is the principal legislation that regulates the Eritrean mining sector; the Mining Operations Regulation No. 19/1995 (MOR) and the Mining Income Tax Proclamation No. 69/1995 complete the regulatory framework for the industry. The MP has been amended only once since its promulgation, following the enactment of Proclamation No. 165/2011.

The sector is overseen by the Ministry of Mines and Energy (Ministry), which was established in 1993, and is the authorised Licensing Authority (LA) with responsibility for the administration, regulation and coordination of all mining operations in Eritrea. The Department of Mines (Department) sits within the Ministry and encompasses the Geological Survey, the Mines Administration and the Mineral Resources Division. According to the Ministry website, the Department is actively engaged in diverse activities ranging from exploration and mapping to supervising and monitoring operations.

According to the MP, minerals in Eritrea are public property and the state shall ensure the conservation and development of the resources for the benefit of the people.

GRANTS AND FORMS OF MINERAL TITLE

Complete applications for mineral licences in the proper form shall be registered in the order they are received (Art. 7(1), MP). Within 14 days of registration a notice of each application shall be published by the applicant in a newspaper with wide circulation in Eritrea (Reg. 7(2), MOR). This publication shall initiate a 30-day period during which time written objections against an application may be lodged (Reg. 8, MOR; see also Reg. 9(2), MOR).

Pursuant to Article 5(1) of the MP, applicants for mineral licences must possess the required financial resources, technical competence, professional skill and experience necessary to fulfil the licence obligations (see also Reg. 9(1)(a), MOR). Applications for licences made by a legal person must include details of the company and its representatives in Eritrea and the following certified documentation: copies of its memorandum and articles of association; copies of the latest annual report of the board of directors (if available); copies of the balance sheet, profit and loss statements and auditor’s reports for the previous three years (if available); a list of the names and details of the board of directors and any other authorised signatory of the applicant; a plan and description of the proposed area; details of any other mineral rights held or previously held; description showing the applicant’s financial situation, technical competence and experience; and a work programme and expenditure plan (Reg. 3(2)(c), MOR).

The MP provides for the following mineral rights:

  • Prospecting Licence (PL): Grants the holder the exclusive right to prospect for the minerals within the licence area. Applications for PL must include only the information listed above (Reg. 3, MOR). PLs are valid for a period of one year and are not renewable (Art. 8(2), MP); licences may be granted for a maximum area of 100km2 (Reg. 12(1)(a), MOR).

 

  • Exploration Licence (EL): Grants the holder the exclusive right to explore for all minerals in the licence area other than construction material, mineral water and geothermal deposits (Art. 9(1), MP). A PL holder who makes a discovery of indications of minerals within the area shall have the right to be granted an EL providing they meet the application requirements, have fulfilled the obligations of the PL and are not in breach of any of the relevant laws or regulations (Art. 8(3), MP; see also Art. 13, MP). In addition to the information listed above, applications for EL must also include details of the PL held by the applicant (if any) and a report summarising known geological information (Reg. 4, MOR). ELs are granted for an initial period of three years, renewable twice for additional terms of one year each. Further renewals may be granted at the discretion of the LA (Art. 10(1), MP). Licences may be granted for a maximum area of 50km2 (Reg. 12(1)(b), MOR). Applications for renewal must be submitted at least 90 days before expiry of the existing term and shall contain: details of any changes in information since the original application; annual reports and details of the work programme for the renewal period (Reg. 15(1), MOR).

 

  • Mining Licence (ML): Grants the holder the exclusive right to mine for specified minerals within the licence area (Art. 16(1), MP). An EL holder who discovers a mineral deposit which may be mined on an economically viable basis shall have the right to be granted an ML if they meet the application requirements, have fulfilled the obligations of the EL and are not in breach of any relevant laws and regulations (Art. 10(3), MP). Alongside the information listed above, applications for ML must also include: details of the EL on which the application is based; the period for which the ML is sought; details of the deposit; a detailed description of the area; a proposed development and production programme; a feasibility study with relevant financial information; a summary programme of employment and training; details of infrastructure requirements; and an EIA Report(Reg. 5(1), MOR). Licences may be granted for a maximum area of 10km2 (Reg. 12(1)(c), MOR). ML are granted for a maximum period of 20 years or the life of the deposit, whichever is shorter; licences may be renewed, with each renewal for a maximum period of 10 years (Art. 17(1), MP). Applications for renewal must be submitted at least 180 days prior to the expiry of the existing term and must contain details of remaining reserves and any changes in information since the original application (Reg. 16(1), MOR).

 

PL may not be transferred, assigned, encumbered or inherited (Art. 8(1), MP). EL and ML may be transferred with the prior consent of the LA.

The MP also provides for discovery certificates and artisanal mining licences (Art. 14, MP).

DEVELOPMENT CONSIDERATIONS

Under the terms of the environmental legislation, no development project shall be implemented without an Environmental Clearance Permit. In terms of an EIA, the majority of mining activities are classified as ‘Category A’, thus require an EIA as mandatory. For additional information please see the ‘Environmental Overview Commentary’ below. The LA may require licence holders to provide a guarantee for rehabilitation (Art. 42, MRL).

Where persons are displaced as a result of mining activities an agreement on compensation should be negotiated (Art. 22, MP).

Royalties, licence fees and annual rentals are provided for and the state has a right to a free carried interest. The state also has the right to undertake mining operations that are vital for overall economic growth, either alone or in partnership with private investors (Art. 7, MP).

EL and ML holders are required to submit a programme for the employment and training of Eritrean nationals on an annual basis (Reg. 29, MOR). Reporting requirements are provided for under Reg. 31, MOR. ML holders must submitted quarterly reports on a range of subjects (Reg. 31(4), MOR).

ENVIRONMENTAL REGULATION

See Eritrea - Environmental Overview Commentary.

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Environmental Overview Commentary plus sign

ERITREA - ENVIRONMENTAL REGULATIONS

GENERAL

Eritrea is located on the Horn of Africa, with Sudan, Ethiopia, Djibouti and the Red Sea bordering. The country has an area of approximately 117,600 km2 – making it the 37th largest African country. Eritrea has a distinct funnel shape, with the wide mouth of the funnel in the north narrowing to a thin spout at the southern end. The Dahlak Archipelago, which encompasses over 120 islands, also forms part of Eritrea, as do a limited number of islands in the Hanish Islands group – the majority of which belong to Yemen.

Highlands dominate Eritrea’s landscape, with a continuation of the Ethiopian Highlands running north into the country, dividing west from east. On the eastern side of this mountainous region are coastal plains, whilst on the western side more fertile land can be found, comprised of hills in the north and rolling plains in the south. As a result of Eritrea’s varying landscape, in particular the changes in elevation across the country, several different climates occur.

Though Eritrea’s large mammal species have reduced significantly over time, lions, elephants, leopards, zebras and various antelope species still roam the country. According to the Ministry of Information, Eritrea is also home to over 560 species of bird, including ostrich, great cormorant, masked booby and a host of different kite, vulture, eagle, falcon, buzzard and hawk breeds. The country’s national animal is the Arabian camel.

Deforestation, droughts, soil erosion and desertification are amongst Eritrea’s environmental challenges.

PRINCIPAL LEGISLATION AND REGULATOR

As a relatively young country, Eritrea is still in the process of developing a formal legal framework to govern environmental protection and environmental impact assessment (EIA) requirements. Since implementation in 1999, the National Environmental Assessment Procedures and Guidelines (NEAPG) have unofficially regulated the EIA process in Eritrea. In June 2017, the government issued the Environmental Protection and Management Rehabilitation Framework Proclamation No. 179/2017 (EP) and the Environmental Protection and Management Regulations Legal Notice No. 127/2017 (ER). According to Article 4, EP the objectives of the proclamation include: the establishment of environmental management and protection laws; the advancement of an environmental policy framework consistent with sustainable development; the guarantee and promotion of maximum public and community participation in the conservation, protection and enhancement of the environment; and the establishment of the basis for Eritrea’s effective contribution to and benefit from international co-operation in the global efforts for environmental protection (Art. 4, EP). Collectively the NEAPG, the EP and the ER now provide the regulatory framework for environmental matters in Eritrea.

The Minister of Land, Water and Environment (Minister) is the head of the Ministry of Land, Water and Environment (Ministry) and has overall responsibility for the administration of the EP and the implementation of an integrated environmental management plan (Art. 6(1), EP). The Minister is also charged with establishing an Environmental Impact Assessment (EIA) system for developmental projects and activities (Art. 6(2)(b), EP). The Department of Environment (Department), which sits within the Ministry, is responsible for the day-to-day administration of the EP (Art. 7, EP). The Director General heads the Department and oversees its work (Art. 7, EP). Each administrative zone is now required to have a branch office with responsibility for environmental affairs (Art. 8, EP). The EP also requires the establishment of environmental units in each line ministry, which shall be responsible for compliance with the EP and liaising with the Department on environmental matters (Art. 11(2), EP). The National Environmental Council (NEC), which is composed of the Director Generals of various ministries and charged with numerous responsibilities, including the identification of national priority goals and objectives on environmental protection and the promotion of co-operation and co-ordination among line ministries on environmental protection programmes, was also established under the terms of the EP (Arts. 12 – 16, EP). According to the NEAPG, the technical review during the EIA process is to be undertaken by the Impact Review Committee (IRC) (s. 5.13, NEAPG). The composition of the IRC can vary with the type, scale and location of a project but general parameters for its composition are provided under Section 5.15, NEAPG.

EIA PROCESS

According to the EP, no development project or activity shall be implemented without an Environmental Clearance Permit (ECP) (Art. 19, EP). The law also states that the NEAPG shall be mandatorily applied for proposed projects and activities that are likely to have a significant adverse social and environmental impact (Art. 20(1), EP). Licensing authorities are prohibited from issuing licences or permits for projects which require an EIA unless the application is accompanied by an EIA that meets the requirements of the EP (Art. 20(4), EP; see also Reg. 5(1)(j), Mining Operations Regulation).

Under the terms of the NEAPG projects are broken down into three categories – A, B and C. Projects in categories A and B will require an EIA as mandatory (Reg. 4(2), ER). (Note that this contradicts the terms of NEAPG which contemplates a screening process for Category B projects in order to determine the need for an EIA). Mining of precious metals, diamonds, metalliferous ores, phosphates and various industrial minerals in areas over five hectares, are classified as Category A activities, thus require an EIA (see Appendix A, Table 4, NEAPG). Exploration activities are not categorised under the NEAPG but may require an EIA as mandatory if they are carried out in environmentally sensitive areas (see Appendix B, NPEAG). That said, exploration activities will still require an ECP and will therefore need to undergo a screening process.

Environmental Screening

For projects or activities that are not categorised under the NPEAG (e.g. exploration activities), the first stage in obtaining an ECP is an environmental screening, which shall be used to determine the level of environmental review required. Proponents must submit a brief statement that describes:

  • The nature of the project / activity;
  • The works to be undertaken;
  • The location of the project;
  • The technology selected for use;
  • The possible products or by-products;
  • Social and economic benefits anticipated from the project;
  • The possible environmental impacts of the project and the prescribed mitigation and management plan; and
  • Any other information that may be relevant to the EIA (see Reg. 3, ER).

 

Following screening, projects will be placed into one of three categories. Exploration activities which are classified as Category C (i.e. a project with minimal or no negative impact) will obtain clearance without delay (s. 3.1, NPEAG). As noted above, under the terms of the ER, Category A & B projects will now require an EIA as mandatory. This differs from the terms of the NEAPG, which requires an Environmental Evaluation for Category B projects (see Chapter 4, NEAPG).

Environmental Impact Assessment

A qualified expert is required to undertake the EIA process (Reg. 4(3), ER). The stages and requirements for the EIA are clearly provided for under the NEAPG (see Chapter 5, NEAPG). The following steps apply:

Step 1: Scoping & Terms of Reference (TOR): During this stage, the proponent and the “relevant Government agency” must agree on a preliminary list of potentially significant impacts to be considered in the assessment. A scoping checklist is provided for this purpose. A list of stakeholders must also be agreed. A stakeholder consultation should be undertaken, which should include a visit to the project location by the proponent, a representative from the Department and / or those with local knowledge. A Project Scoping Report (PSR) must be prepared detailing the scoping activities and the outcome of all stakeholder consultations. The PSR must then be submitted to the Department. The TOR may then be agreed. TOR are required to ensure that: the EIA study is defined and structured; the EIA study will be completed according to an agreed timetable; emphasis is placed on the potentially significant adverse impacts, possible alternatives and mitigation; and that stakeholders are consulted during the process. General headings and section guidance for the TOR are provided for under s. 5.6, NEAPG.

Step 2: EIA Study: During this stage the proponent is required to produce an EIA Report and a draft Environmental Management Plan (EMP). Acceptance of the EIA Report is a pre-condition for environmental clearance. In order to be accepted the EIA Report and draft EMP must contain sufficient detail to allow the IRC to arrive at a recommendation for the project. The EMP will provide the basis of environmental management and the proponent must commit to its implementation (s. 5.7, NEAPG). The EIA Report and EMP requirements are clearly provided for under Sections 5.8 – 5.10, NEAPG. Note that the final EMP should not be completed until after the environmental review, as any conditions of grant or approval should be incorporated into the EMP. For this reason only a draft EMP is prepared at this stage of the review.

Step 3: EIA Adequacy Review: This initial review aims to establish the adequacy of the coverage in the EIA Report and draft EMP before a technical review is undertaken (see Step 5). Procedural steps for this assessment are provided for under Table A.5, NEAPG. In cases where the EIA Report and draft EMP are considered inadequate or incomplete the Department is expected to advise the proponent on how the information can be obtained and provided. Where the documentation is considered adequate a technical review shall be initiated. 

Step 4: Stakeholder Consultation: Prior to the convening of the IRC (see Step 5) all stakeholders identified during Step 1 must be informed and granted access to the EIA Report and draft EMP by the Department. Written comments should be encouraged. Where local communities are likely to be affected directly by the implementation of the project it is essential that consultation take place at all levels. Comments must be submitted within 21 days of the acceptance of the EIA Report and draft EMP (see Step 3) and the proponent shall be given 14 days to submit responses to the Department (see Table A.6, NEAPG). Comments and any subsequent responses from the proponent must be made available to the IRC at least seven days before its review (s. 5.16, NEAPG; see also Table A.6, NEAPG). 

Step 5: Impact Review Committee Decision: The IRC is responsible for undertaking a technical review of the EIA Report and draft EMP. The Department is charged with identifying members for the IRC and shall submit copies of the documentation to them for review. Upon receipt of the documentation the IRC shall have a maximum of 49 days to review the EIA Report. The Department shall chair a meeting of the IRC and its members will then have seven days to unanimously agree a recommendation and justify the decision (see Table A.6, NEAPG).

Environmental Clearance Permit

According to the ER, ECPs are to be issued in accordance with the terms of the NPEAG (Reg. 8, ER). Under the NPEAG the IRC has the option to make the following recommendations to the Director General on completion of its review:

  • Unconditional Environmental Clearance: where there are no environmental reasons why the project should not be approved as proposed an ECP should be automatically granted.
  • Conditional Environmental Clearance: where there are environmental impacts that should be avoided the project should be permitted subject to the incorporation of agreed mitigation measures into the final EMP.
  • Postponed Environmental Clearance: Significant impacts have been identified that must be avoided to adequately protect the environment. Project approval shall be delayed until improved evidence of an ability to mitigate such impacts has been presented to the IRC. Revision of the EIA Report and draft EMP may be required.
  • Rejection of Environmental Clearance: The IRC has identified adverse impacts of sufficient magnitude that the project should not proceed as proposed. The project shall be rejected due to a lack of evidence that such impacts can be adequately mitigated.

For further detail, see Section 5.17, NEAPG.

Where amendments to the draft EMP are required, a revised version shall be submitted to the Department for final review.

Notably the decision of the IRC shall not be binding upon the Department or the Director-General. Following a review of the EIA Report and a recommendation from the IRC, the Director General, in consultation with the Ministry of Mines and Energy, may: grant the ECP providing the EIA Report meets the requirements of the EP, ER and NPEAG; require the proponent to redesign the project or make necessary amendments to it; or reject the grant of the ECP where of the opinion that the project is likely to cause significant and irreversible damage to the environment (Reg. 5(1), ER).

Where the proponent or Department are of the opinion that the IRC has conducted its review inappropriately, the matter may be referred to the Minister for arbitration (s. 5.19, NEAPG). Requests for the Director General to reconsider a decision must be made within 30 days (Reg. 5(3), ER). Within 30 days of such request the Director General shall issue a final decision (Reg. 5(4), ER). The decision of the Director General may then be appealed to the Minister, whose decision on the matter shall be considered final (Reg. 5(5), ER).

An ECP may be suspended or revoked where the holder fails to comply with its conditions (Reg. 16, ER).

Other

Project owners are under an obligation to continuously monitor and record environmental impacts and consequences throughout the project; records must be kept and maintained for environmental audits (Art. 36, EP). Projects may be monitored and inspected in accordance with the terms of the EP, ER and NPEAG

Where an ECP has been issued (see above) the licence holder may be required to submit an updated EIA Report where there is a substantial change or modification in the project or its operation or where an environmental threat arises which could not have been reasonably foreseen during the initial review (Reg. 6, ER).

The EP grants any person and community a right to bring a civil action against a person whose activity is causing or is likely to cause harm to human health or the environment (Art. 39, EP). In this regard, the EP explicitly states that there is no requirement to demonstrate a vested interest.

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